Your policy ideas for the next government?

With the next Australian election only a few weeks away, now is a good time to say which economic micro and macro policies you think a next government can/should implement.

Around and in between past elections I gave you my list of things to do and things not to do (see here and here). I will give you my updated list for this election but first want to hear what your suggestions are in the comment thread.

5 thoughts on “Your policy ideas for the next government?”

1. Reduce income taxes by having land, payroll and consumption taxes. Taxes should be low, simple and broad. Result: More efficient tax system.

2. Remove most current welfare payments (except for payments like carers and disability support). Let any permanent resident with a tax file number receive up to $500/week for six months, no questions asked. The welfare payments are registered as a HECS style debt that is paid back to the government through the PAYG system. Interest is charged daily at CPI + 1%. After six months, if recipients require more assistance they return to the current system.

Results: 1. Less public servants to administer Centrelink payments.
2. The unemployed and needy can easily acquire enough money to live rather than the current meagre Newstart Allowance.
3. The Federal Government can provide more welfare at no net cost to itself.
4. Reduces the misallocation of resources by not giving out unnecessary welfare. E.g. some recipients of baby bonus.

Problem: $500/week may raise effective marginal tax rates for low skilled people trying to return to work? Though workers could obtain a wage and still receive the benefit.

1. There shall be open borders and free trade. Exceptions can be made for certain individuals (Eg. Those with a criminal record or terrorists.) This will allow the labour market to adjust based on supply and demand of different jobs. Free trade will help break up any existing monopolies (Eg. Woolies and Coles.)

2. Medicare will be changed to a public option and the tax rebate repealed. Anyone opting out of Medicare will be able to receive a voucher to purchase health insurance or use a health savings account. This will increase the incentive for the government to improve the public health system and also gives the socioeconomically disadvantaged the ability to purchase private insurance if they desire.

3. Medical licensing laws are repealed and replaced with a certification program. This one may be controversial, but, it may prevent medical specialists from acting as a cartel.

4. Drug reimportation is allowed. This will prevent pharmaceutical companies from charging monopoly rents based on their IP protections. It is also more efficient than a price setting board.

5. All students attending university will receive a set voucher which they can use to attend any certified, educational institution. This will introduce competition into the university system. Competition will raise standards, and allow diversification of the educational experience. Different students have different ways that they want to be educated.

6. Establish a National Infrastructure Bank. This would allow infrastructure to be financed without raising taxes (user fees would repay loans). Borrowing costs would be lower and projects would be examined by an independent panel of experts.

7. Drug legalization. This one is also controversial, but would significantly increase government revenue and decrease crime. The only losers of this policy are the drug cartels.

1. There shall be open borders and free trade. Exceptions can be made for certain individuals (Eg. Those with a criminal record or terrorists.) This will allow the labour market to adjust based on supply and demand of different jobs. Free trade will help break up any existing monopolies (Eg. Woolies and Coles.)

2. Medicare will be changed to a public option and the tax rebate repealed. Anyone opting out of Medicare will be able to receive a voucher to purchase health insurance or use a health savings account. This will increase the incentive for the government to improve the public health system and also gives the socioeconomically disadvantaged the ability to purchase private insurance if they desire.

3. Medical licensing laws are repealed and replaced with a certification program. This one may be controversial, but, it may prevent medical specialists from acting as a cartel.

4. Drug reimportation is allowed. This will prevent pharmaceutical companies from charging monopoly rents based on their IP protections. It is also more efficient than a price setting board.

5. All students attending university will receive a set voucher which they can use to attend any certified, educational institution. This will introduce competition into the university system. Competition will raise standards, and allow diversification of the educational experience. Different students have different ways that they want to be educated.

6. Establish a National Infrastructure Bank. This would allow infrastructure to be financed without raising taxes (user fees would repay loans). Borrowing costs would be lower and projects would be examined by an independent panel of experts.

7. Drug legalization. This one is also controversial, but would significantly increase government revenue and decrease crime. The only losers of this policy are the drug cartels.

Increase the top rate of income tax in 5% increments per year, and lower the other income tax rates if the higher top rate leads to a surplus, until unemployment returns to what it was between 1945 and 1975 (i.e. under 2%, and 1 hour of voluntary work didn’t mean you weren’t counted then either). Income at the top rate is disproportionaly saved, so taxing it and reducing other taxes can lead to an increase in aggregate demand and drop in unemployment. The Australian economy worked well this way for 30 years, and it is way past time for us to return to it working that way again.

My responses would be mainly driven by efforts to encourage our local economy:
1. Discourage speculative investment by introducing a Tobin task and reducing the CGT discount to 10% per annum for each year held until year 5 (instead of 50% immediately).
2. Introduce an environmental and labour regulation levelling levy that imposes impostes on imports based on the lack of regulatory protections the exporting country has on its labour and environment.
3. Increase corporate tax to decrease the marginal cost of labour to encourage hiring and encourage more full-time employment. Note that profit is an imposte on the value chain and if large portions of it are flowing overseas then this is a drain on the local eonomy. A higher corporate tax will capture more of that before it leaves the shore and return it to Australia.
4. Add a couple of extra marginal tax rates at higher levels than current. Say 50% above $200K and then 75% above $500K.
5. Provide a minimum payment to every citizen of $10,000 per annum (will need to do some limits to stop baby bonus type effects)
6. Increase the carbon tax to $40 per tonne and provide more capital startup funds to build renewable energy infrastructure
7. Vastly reduce HECS-Help and FEE-Help, cap local university places to forecasted local requirement and significantly increase university funding and cap uni fees for locals to the vastly reduced HECS-HELP and FEE-Help limits.
8. Disaggregate medical colleges from having the right to artifically restrict the health care medical service provider market. Do the same for dental, engineering, accounting etc.
9. Significantly increase the government research into corporate products to detect dangerous, useless, over-valued and socially negative products. Vastly increase government’s information provision to the public on these things. Remove all industry funded regualtory bodies and replace them with independent publically funded ones with strict criminal sanctions on revolving doors.
10. Establish a national non-profit bank (much like the old commonwealth bank), outlaw private insurance and establish a national non-profit insurer
11. Establish Estate taxes with close to 100% for Estates above say $5M and progressively lower rates down to say $100K.
12. Extrememly significantly increase government funded research and significantly decrease the research and development incentives in the corporate tax arena. Ensure reserach funding is based on maximising community benefit not maximising corporate profit.
13. Significantly beef up the environmental regulatory agencies to funding levels that make it easy to audit environmental impacts
14. Publically fund Wikileaks

Most of the above would improve our local economy, boost jobs, and significantly improve economic growth, but none would get past the vested interests funding our major political parties.